TMI Tax Updates - e-Newsletter
November 13, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise Indian Laws

Articles

• GST – Another chance for claiming Transitional credit now
• RECENT DEVELOPMENTS IN GST

News

• New GST Returns

  ---

• BRICS Countries bring stability & balance in an uncertain World;focus on Trade as catalyst of development- Piyush Goyal

  ---

• Suggestions from the Industry and Trade Associations for Budget 2020-21 regarding changes in direct and indirect taxes

  ---

Notifications

GST - States

• 49/2019-State Tax - dated 9-10-2019 - Chhattisgarh SGST
  Chhattisgarh Goods and Services Tax (Sixth Amendment) Rules, 2019.

  ---

Highlights / Catch Notes

GST

• The coal beneficiation services fall under the purview of SAC 9997 and is chargeable at the rate of 18% GST - the Transportation services fall under the SAC 9965 and is chargeable to tax @12% but if supplier does not avail Input tax credit the GST Rate would be 5%.
  Visit to Get Source

  ---

• Promotions of Research and Publishing of online research journal are not activities contemplated in the exemption entry since they do not fall under care or counselling; or spreading public awareness; or advancement of religion, spirituality or yoga; or advancement of educational programmes or skill development.
  Visit to Get Source

  ---

• Classification of Works contract - work under e-tender - Thermal Power Project - the tender document in question is a not consolidated contract and each supply under the said contract shall be chargeable to tax individually, depending upon the individual classification of such supplies and rate of tax applicable at the time of supply.
  Visit to Get Source

  ---

• Classification of an item - Utility Van - he utility vehicles in question shall merit classification under Chapter Head 8704 of GST Tariff
  Visit to Get Source

  ---

• Activity of transportation of their students and staff under contract carriage by Non-A/c buses - services of hiring of vehicles under Contract Carriage - Benefit of exemption from GST is available.
  Visit to Get Source

  ---

• Disqualification of the petitioner in respect of the tender issued by the respondents - The GST @ 18% indicated by the petitioner in their attachment to the techno commercial bid, is contrary to the terms and conditions of the NIT and as the petitioner has deviated from the terms and conditions of the NIT, the respondents have rightly disqualified the petitioner
  Visit to Get Source

  ---

Income Tax

• Disallowance of deduction claimed u/s 10AA - importing diamonds for re-export - whether activity of the assessee comes within the expression ‘services’? - Held Yes - As per the definition of ‘services’ under the SEZ Rules, 2006, trading also comes within its ambit.
  Visit to Get Source

  ---

• Income from other sources - Addition u/s 40A(3) - cash payment exceeding prescribed threshold - mere omission of reference to section 58 by the AO would not render the addition so made by the Assessing Officer untenable in law
  Visit to Get Source

  ---

• Condonation of delay in filing an appeal - mistake on the part of the counsel - The submission that the assessee could not collect a letter from the Counsel in view of the strained relationship, is a reasonable explanation when we take into account human conduct and probabilities, since a professional counsel cannot be expected to admit his lapses, lest it should affect his reputation - Delay condoned.
  Visit to Get Source

  ---

• Addition u/s 40A(2)(b) - disallowance of milk transportation charges paid to specified persons - as per the details, the payment to related parties works out to 62 paise per litre as against 69 paise per litre paid to unrelated parties - there is no merit in making any disallowance u/s 40A(2)(b).
  Visit to Get Source

  ---

Customs

• Refund of excess Customs duty paid - finalization of provisional assessment - unjust enrichment - the doctrine of unjust enrichment is not applicable in the present case because the Shipping Corporation of India is a Public Sector Undertaking.
  Visit to Get Source

  ---

• Valuation of imported goods - hot rolled steel plates (non-alloy) - Such excess undervaluation, as alleged, should have been subject to serious investigation and appropriate penalties imposed if found to be so. In the absence of such, it can only be deduced that the exercise of enhancement of value so undertaken was without sufficient evidence on hand.
  Visit to Get Source

  ---

• There was no mis-declaration at all and the appellant is entitled for the exemption notification in any case and there is nothing to be gained by the appellant by classifying their product under one heading or the other, the confiscation of the goods and imposition of penalties are also not sustainable.
  Visit to Get Source

  ---

Service Tax

• Condonation of delay in filing appeal - an appeal was filed by the Managing Director of the petitioner-firm with a delay of 272 days, due to reasons, beyond his control, like death of his mother, hospitalization and recovery of his illness - power of Commissioner (Appeals) to condone delay - delay cannot be condoned.
  Visit to Get Source

  ---

• Imposition of penalty - since there is reasonable cause for the failure on the part of the appellant in non-payment of service tax during the period of hegemony of taxability on renting of immovable property, no penalty is leviable on the appellant.
  Visit to Get Source

  ---

• Waiver of penalty - There are no malafide intentions of the railways found, not to pay service tax on the activity undertaken by them for providing the services of ‘Sale of Space or Time for Advertisement’ - penalty rightly waived
  Visit to Get Source

  ---

• CENVAT Credit - capital goods - The motor vehicles need not be used exclusively for providing cargo handling or other listed services. The mere fact that they have also used motor vehicles for some other purposes does not deprive them of their CENVAT Credit on motor vehicles.
  Visit to Get Source

  ---

Central Excise

• Refund of excess duty paid - Period of limitation - original refund application was filed within time but it was returned for deficiencies and is resubmitted by the assessee after rectifying the defects - the date of their original refund application filed before the LTU New Delhi should be reckoned as the date of filing the refund application
  Visit to Get Source

  ---

• Refund - Unjust enrichment - Since, the refund in question was not a part of excess duty indicated in the profit and loss account and separate accounting treatment was provided in the Balance Sheet, the interpretation placed by the learned Commissioner (Appeals) regarding transfer of refund amount to the Consumer Welfare Fund cannot be sustained.
  Visit to Get Source

  ---

• CENVAT Credit - credit of capital goods on TG-2 denied - Rule 6(4) of CCR 2004 prohibits availment of Cenvat credit on capital goods used exclusively for manufacture of exempted goods. - the extended period of limitation has been correctly invoked and also the penalties have been correctly imposed upon the appellant.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2019 (11) TMI 533
  Maintainability of application - scope of Advance Ruling application - first Proviso to Section 98(2) of the GST Act 2017 - Classification of an item - processing of milk and milk products including flavoured milk - Whether flavoured milk is taxable at the rate of 5% under Schedule IV of the GST Act? HELD THAT:- There is no hesitation in concluding that the instant application is not maintainable in as much as it is hit by the provisions contained in first proviso to Section 98(2) of the Act. Accordingly, without going into the merits of the case, the application deserves to be rejected as not admissible in terms of first Proviso to Section 98(2) of the Act.

  ---

• 2019 (11) TMI 532
  Rate of GST - transportation services by Goods Transport Agency (GTA) by road under RCM - coal beneficiation and loading charges - Rate of GST. HELD THAT:- Both the services are independent of each other. The price charged by the supplier for both the services are separately mentioned in price bid invited by the company and none of the services can be considered as predominant over the other service. Both the services are important for the company and the company has invited tender for availing both the services. The coal beneficiation services fall under the purview of SAC 9997 and is chargeable at the rate of 18% GST - the Transportation services fall under the SAC 9965 and is chargeable to tax @12% but if supplier does not avail Input tax credit the GST Rate would be 5%.

  ---

• 2019 (11) TMI 531
  Exemption from GST - Charitable Activities or not - Activities for Promotion of research in the field of Life Sciences, Physical Sciences etc, Performing publishing of online research journals on one or more of above-mentioned field/subjects and Organizing Seminars, Symposiums, Conventions, Congress etc. addressing on one or more of various issues - applicability of clause 2(r) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. HELD THAT:- The definition of Charitable Activity is not an inclusive definition but an exclusive one, meaning that the specific activities which are treated to be falling under Charitable Activity are an exhaustive list and there is no scope of interpretation as to which activities might fall under charitable category - A joint reading of activities covered under the Notification and the activities performed show that Promotions of Research and Publishing of online research journal are not activities contemplated in the exemption entry since they do not fall under care or counselling; or spreading public awareness; or advancement of religion, spirituality or yoga; or advancement of educational programmes or skill development. Organization of Seminars, Symposiums and Conventions come under the term spreading of public awareness , if they are for the spreading of Public Awareness of preventive health, family planning or prevention of HIV infection shall be covered under the exemption notification. The determinative factor in this case would be to ascertain whether the programme is open for public or not - Once it is established that it is not for select group of people or for a class of people, then such activity ceases to a Public Awareness activity. Since the applicability of the exemption is dependent on whether the activity is for Public Awareness, which is a fact to be ascertained from each case. In such case, Advance Ruling cannot be passed in absence of facts. Thus, the activities of Promotion of Research and activity of Performing and publishing online research journal does not fall under Charitable Activity under Notification No 12/2017 - CT (R) and corresponding notification issued under MPGST Act.

  ---

• 2019 (11) TMI 530
  Classification of Works contract - work under e-tender process by MP Power Generating Company Ltd (MPPGCL) for Balance General Civil and Related Electrical And Mechanical Works Package For 2X660 MW Shree Singaji Thermal Power Project (SSTPP) Stage - II Near Village Dongalia. Distt. Khandwa, Madhya Pradesh ,India - composite contract or is it separate contract for each work under taken? - Government Entity or not - rate of tax. HELD THAT:- MPPGCL is a Government Entity for the purpose of provisions of CGST Act 2017 and MPGST Act 2017. In the instant case, the applicant have been awarded a consolidated contract for carrying out different specified works at Shri Singaji Thermal Power Project, which includes erection, commissioning, installation etc. - It is also necessary to place on record that there are certain items mentioned in the subject contract including, but not limited to, Fitness Centre cum Gym , which definitely do not find place in the ambit of essential work entrusted by the State Government to MPPGCL. Needless to mention that such work shall not qualify for exemption as envisaged under Sr.No.3(vi) to the Notification no. 11/2017-CT(Rate), in as much as it does not fall within the scope of work entrusted by Government of Madhya Pradesh to MPPGCL. The work entrusted vide subject tender document/contract awarded to the Applicant by MPPGCL cannot be termed as composite supply and thus entire work under the said contract shall not be entitled to concessional rate in terms of Notification No.11/2017-CT(R) dtd.28.06.2017 - Also, the supply of goods and/or services which squarely fall within the ambit of scope of work entrusted to MPPGCL by the Government of Madhya Pradesh shall be entitled for concessional rate under Sr.No.3(vi) to Notification No.11/2017-CT(R). Accordingly, each and every supply under the subject contract shall be treated separately for determining the rate of tax under the CGST Act 2017 read with the provisions of GST Tariff and respective exemption notifications. Thus, the tender document in question is a not consolidated contract and each supply under the said contract shall be chargeable to tax individually, depending upon the individual classification of such supplies and rate of tax applicable at the time of supply.

  ---

• 2019 (11) TMI 529
  Classification of an item - Utility Van - whether classifiable under chapter Pleading 8703 or Chapter Heading 8704? HELD THAT:- The Customs Tariff, as also the GST Tariff, broadly classifies the vehicles under two categories viz. Vehicles for transport of passengers and vehicles for transport of goods. As per statutory requirements laid down under the provisions of Motor Vehicle Act 1988 and Motor vehicle Rules 1989, each type of vehicle is required to be certified either by the Vehicle Research and Development Establishment of Ministry of Defense or by the Automobile Research Association of India, or certain other authorities. The goods in questions i.e. Utility vehicles, are predominantly designed for transportation of goods and these vehicles also conform to the categorisations and conditions laid down under Automotive Industry Standards AIS 053 as Category N vehicles for carrying /goods - thus, the utility vehicles in question shall merit classification under Chapter Head 8704 of GST Tariff and shall be liable to GST at the rate applicable at the time of supply.

  ---

• 2019 (11) TMI 528
  Activity of transportation of their students and staff under contract carriage by Non-A/c buses - Benefit of exemption from GST - Applicability of serial no. 15(b)(HSN/SAC Code 9964) of exemption Notification No. 12/2017 (Rate) dated 28-06-2017 as amended HELD THAT:- As per the agreement, the vehicles to be provided by the applicant under contract carriage to the said Institute are non-air conditioned and are for transportation of students and staff of the said Institute - As per clause (b) of above SI. No. 15 of Notification No. 12/2017-Central Tax (Rate), dated 28.6.2017, the services of transportation of passengers, with or without accompanied belongings, by non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire is exempt from GST. Considering the various clauses of the Agreement entered into by the applicant with Chameli Devi Institute of Technology and Management, Indore, it is clear that the applicant is providing the services of transportation of students and staff of the contracee's Institute under contract carriage, and the said transportation of students and staff is by non-air conditioned buses. Therefore, it will be exempt from GST as per clause (b) of SI. No. 15 of Notification No. 12/2017-Central Tax (Rate), dated 28.6.2017. As the service is exempt, the question for rate of tax, not considered.

  ---

• 2019 (11) TMI 527
  Freezing of petitioner's Bank Account - no order in terms of Section 83 of the CGST Act, 2017 read with Rule 159 of CGST Rules, 2017 is served upon petitioner - HELD THAT:- We direct the respondents to produce the original record with regard to issuance of the two aforesaid communications, freezing the bank accounts of the petitioner. The order passed in terms of the aforesaid provision should also be produced on the next date. List on 20.11.2019.

  ---

• 2019 (11) TMI 526
  Disqualification of the petitioner in respect of the tender issued by the respondents - supply, installation and commissioning of skid mounted, oil lubricated helium gas recovery compressor with essential spares - detailed and exhaustive reply has been filed in the matter and the respondents have stated that the petitioner did participate in the tender process, however, as the petitioner has deviated from the tender conditions and, therefore, the petitioner has been declared as disqualified - stand of the respondents is that the petitioner's bid was not in consonance with the terms and conditions of the tender document and as per the terms of the tender, after evaluation of part I techno commercial bid, the part II ie., price bid is opened. HELD THAT:- The tender which was subject matter of the Writ Petition was issued ie., Tender No. 33227, for supply, installation and commissioning of skid mounted, oil lubricated helium gas recovery compressor with essential spares. The last date for submission of tender was 27/12/2018 and the petitioner has submitted his Techno Commercial and Price Bid on 22/12/2018. The respondents have stated that the contract was in respect of supply, installation, commissioning of skid mounted oil lubricated helium gas recovery compressor with essential spares and as per Part I ie., techno commercial bid, the bid was opened on 31/12/2018. It has been stated that the terms and conditions mentioned at Clause 45.1 of eDPS-0-103 version 2018-2, provides in case the bidder does not accept the terms and conditions stipulated in the NIT, their bid will be outrightly rejected . The petitioner himself has admitted his mistake while sending the e-mail communication to the answering respondents stating that the price quoted was inadvertently indicated as FOB instead of ex-works. The GST @ 18% indicated by the petitioner in their attachment to the techno commercial bid, is contrary to the terms and conditions of the NIT and as the petitioner has deviated from the terms and conditions of the NIT, the respondents have rightly disqualified the petitioner - the respondents have rightly rejected the petitioners tender. The scope of interference in the tender matters is quite limited. The apex Court has time and again dealt with the issue of interference in the matter of award of contract. The apex Court in the case of MANOHAR LAL SHARMA VERSUS NARENDRA DAMODARDAS MODI AND ORS. [ 2018 (12) TMI 1716 - SUPREME COURT] where it was held that it is well settled preposition that matters pertaining to the award of contract, being essentially a commercial transaction, have to be determined on the basis of considerations that are relevant to such commercial decisions, and this implies that terms subject to which tenders are invited are not open to judicial scrutiny unless it is found that the same have been tailormade to benefit any particular tenderer or a class of tenderers. Petition dismissed.

  ---

• Income Tax

• 2019 (11) TMI 525
  Income attribution to trust - invoking section 61 - income taxable in the hands of the beneficiaries OR trust - revocable trust or not - tribunal held that the Assessee Trust could not be taxed in its own hands in respect of the income earned by it as the aforesaid three contributors/beneficiaries which had already been taxed in respect of the said income distributed to them by the said Trust - whether income arising by virtue of a revocable transfer of assets shall be chargeable to the income of the transferor and shall be included in his total income? - section 164 applicability - HELD THAT:- SLP dismissed.

  ---

• 2019 (11) TMI 524
  Condonation of delay - non-removal of office objections - delay of 1371 days - HELD THAT:- The special leave petition is dismissed both on the ground of delay and merits. As a sequel to the above, pending interlocutory applications, if any, stand disposed of.

  ---

• 2019 (11) TMI 523
  Release the Jewellery as seized during the course of search and recorded in Panchanama - whether the petitioner is entitled for issue of Mandamus, as sought for in this writ petition? - HELD THAT:- As on date, there is no tax arrears payable by the petitioner. However, the revenue seeks to rely upon Section 132B for retaining the seized assets. Perusal of Section 132B indicates that the same is applicable only in the case where an amount of any existing liability is arrived by the Revenue. It is also to be noted that sub-section (i) of Section 132B(1) also reads that such existing liability can be derived only on completion of the assessment under Section 153A. In this case, it is an admitted fact that the assessment has not been completed in respect of Assessment Year 2013-14. Therefore, in my considered view the Revenue is not justified in relying upon Section 132B to retain the asset, when admittedly, as on date there are no arrears of tax due from the petitioner and that the assessment for 2013-14 is not yet completed and the liability is arrived. In such view of the matter, this Court finds that the petitioner is entitled for return of the jewels retained by the Revenue. Accordingly, this writ petition is allowed and the respondent is directed to return the jewellery, which were seized from the petitioner under the Panchanama dated 19.04.2012. Such exercise shall be done by the respondent within a period of four weeks from the date of receipt of a copy of this order.

  ---

• 2019 (11) TMI 522
  Condonation of delay - delay of 438 days - sufficiency of cause for filing the appeals belatedly - HELD THAT:- We find that the assessee has given the particulars of his tax consultant in the application for condonation of delay as well as affidavits which are matching with the particulars as appearing in the assessment order. CIT(A) has narrated the facts regarding various notices issued to the assessee though through the tax consultant as the address of the tax consultant was given in the Form No. 35. In response to those notices on various occasions, the tax consultant applied for adjournments of hearings but he never appeared before the ld. CIT(A) despite various opportunities and finally all these appeals of the assessee were dismissed ex parte and in limini for want of representation as well as e-filing of the appeals. Thus, the reasons explained by the assessee by giving the details are found to be factually correct to the extent of the authorized representative of the assessee and non-appearance of him before the ld. CIT(A) despite six opportunities were given by the ld. CIT(A). The authorized representative keep on filing the adjournment letters but never attended the proceedings. Therefore, we find that there is nothing on record to indicate that the assessee has acted in malafide or attempted to take any advantage by filing these appeals belatedly. It is also matter of fact that the bank accounts of the assessee were attached by the department and further inventories of the assessee were also seized and lying with the department. In those circumstances, the reasons explained by the assessee are found to be bonafide and not malafide. Further since the CIT(A) has not decided the appeals of the assessee on merits but all the appeals were dismissed in limini, therefore, in these facts and circumstances, we find that though there are inordinate delay in filing these appeals by the assessee, however, the matters ought to have been decided on merits by the CIT(A) instead of dismissing the same in limini - seven appeals of the assessee are allowed for statistical purposes only.

  ---

• 2019 (11) TMI 521
  Penalty u/s 271(1)(c) - non-striking of the irrelevant portion of the notice issued u/sec. 274 - whether the notice issued by the Assessing Officer dated 07/01/2009 is valid or not ? - HELD THAT:- Hon'ble High Court of Telangana A.P. in the case of Smt. Baisetty Revathi [ 2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] has considered the very same issue and held that non-striking of the irrelevant portion of the notice issued u/sec. 274 is invalid. The very same judgment has been followed by the coordinate bench of this tribunal in the case of Konchada Sreeram [ 2017 (11) TMI 1164 - ITAT VISAKHAPATNAM] . Therefore, respectfully following above referred to judicial precedents, we hold that the notice issued under section 274 read with section 271, dated 07/01/2009 is invalid and, therefore penalty order passed by the Assessing Officer, dated 26/02/2016 is hereby cancelled. Appeals filed by the assessees are allowed.

  ---

• 2019 (11) TMI 520
  Stay of demand of disputed tax and interest - Addition u/s 68 - HELD THAT:- Investing entities are having minimal income and the investments made in assessee are preceded by credit of similar amounts in their bank accounts. Thus, the genuineness of these transactions as well credit worthiness of the creditors is doubted by authorities below, Even before us, no such evidences/material is placed to prove to contrary and rather bald statement is made that assessee is not in a position to pay any amount and it is heading for liquidation. No balance sheet/bank statements/ other evidences to prove precarious financial position of the assessee as on date is filed. The assessee could not made out any prima facie case nor is able to show how balance of convenience is in favour of the assessee. Nor the assessee could prove financial difficulties faced by it with evidences such as Balance Sheet/ Bank statements etc as no evidence whatsoever is filed before us to prove financial difficuties faced by it rather only bald statement is made that assessee is heading for liquidation. Rather recent decision of Hon ble Supreme Court in the case of PCIT v. NRA Iron and Steel Private Limited [ 2019 (3) TMI 323 - SUPREME COURT] support the stand of Revenue. An application filed by assessee to recall aforesaid judgment of Hon ble Supreme Court in the case of NRA Iron and Steel Private Limited(supra) has been dismissed by Hon ble Supreme Court in the case of PCIT v. NRA Iron and Steel Private Limited reported in [ 2019 (10) TMI 1178 - SUPREME COURT] . Thus, in our considered view , no case whatsoever has been made by assessee for stay of demand on all the grounds of Prima-facie case, balance of convenience, irreparable loss and financial difficulties before and hence this stay petition stand dismissed.

  ---

• 2019 (11) TMI 519
  Addition in respect of cash found during the course of search - burden of proof - HELD THAT:- It is true that the findings of the ld. CIT(A) are not only illogical but also do not find any place in the law of Income tax. It is equally true that the onus is upon the assessee to explain the possession of cash found at the time of search. In our considered opinion, the burden of proof is more when cash is found in the locker of a bank and not found deposited in the bank account. Considering the status of the appellant s family, her life style and standard of living, vis a vis returned income, we are of the considered opinion that the lower authorities have already given substantial relief in respect of cash found from the locker. Therefore, the findings of the ld. CIT(A) upholding the addition of a paltry sum of ₹ 1,02,800/- does not call for any interference. Ground No. 1 is dismissed. Addition respect of jewellery found during the course of search - HELD THAT:- The undisputed fact is that the jewellery weighing 2300.45 gms was found from Locker No. 323 in Canara Bank, SDA Branch, New Delhi and jewellery weighing 464.75 gms jewellery was found from the residence of the appellant. We find that the Assessing Officer has followed Instruction No. 1916 of 1994 of CBDT in giving relief of 500 gms. per married lady in the family and has further allowed relief of 100 gms in respect of the husband of the appellant. CIT(A) further considering the status of the assessee s family, vis a vis the returned income of the appellant and her husband and after considering the fact that the appellant has been married for more than 25 years, further gave relief of 200 gms of gold jewellery in the case of mother in law of the assessee. After considering the complete status, relief has been granted and addition of ₹ 19.48 lakhs was confirmed by the CIT(A). Even before us, assessee has been constantly harping upon the status of the family of the appellant and returned income of the appellant and her husband. We are of the considered opinion that the first appellate authority has very judiciously considered all the aspects of the appellant and has given substantial relief. We are of the considered view that the status of the family would not justify unexplained possession of jewellery. Even if a family has the highest status in the society, still the family is accountable for the possession of gold/jewellery/cash in hand and cannot take the shelter behind its status without explaining the source of possession. Assessee had taken an alternative plea that the valuation as per the gms. of gold jewellery adopted by the Assessing Officer should be taken as basis for making the addition of balance unexplained jewellery. We find that this has also been discussed by the ld. CIT(A) at para 7.11 of his order on page 12 wherein the ld. CIT(A) has given a categorical finding that this plea of the appellant cannot be accepted because the entire jewellery is not gold only. It has items of diamond also. Therefore, the act of the Assessing Officer in taking the rate as per rates of valuation of gold in valuation report cannot be stated to be erroneous. We do not find any error or infirmity in this finding of the ld. CIT(A). The alternative plea is dismissed.

  ---

• 2019 (11) TMI 518
  Assessment order in the name of non existent company u/s 153A - scheme of amalgamation adopted - HELD THAT:- Framing order in the name of non-existent entity is not a procedural defect curable under section 292B of the Act or under any other provision of the Act but it is a jurisdictional defect and hence any order passed in the name of non-existing person is void ab initio. See assessee own case [ 2019 (9) TMI 1285 - ITAT DELHI] - Appeal of the Department dismissed.

  ---

• 2019 (11) TMI 517
  Revision u/s 263 - gift received from HUF - whether HUF can be considered as a relative or not ? - distinction between lack of inquiry and inadequate inquiry - case reopened for assessment - HELD THAT:- Gift received by the assessee in that case was from his HUF. The assessee was the member of HUF from where gift came to the assessee. The assessment was reopened for conducting an inquiry about the gifts received from Satish Garg HUF. The assessee is not member of Satish Garg HUF. Therefore, the Assessing Officer has erred in construing position of law while accepting the stand of the assessee. A perusal of the assessment order would indicate that no proper inquiry has been made by the Assessing Officer with regard to construing the meaning of expression relative employed in section 56(2) of the Act. The Assessing Officer has based his finding on a decision where HUF has given gifts to its members, and not stranger HUF, therefore, order of the Assessing Officer is erroneous to this extent. Without going into the larger aspect, whether HUF can be considered as a relative or not, we examine the aspect, whether the Assessing Officer has conducted an inquiry and formed an opinion on the basis of record available before him. He has misread the judgment and applied on the given facts without elaborate discussion. Therefore, to this extent, we are of the view that the ld.Commissioner has rightly taken cognizance under section 263, and has rightly set aside the assessment order. As far as additional show cause notice issued under section 263 on 21.3.2018 is concerned, by way of this notice, the ld.Comissioner wish to inquire the gift received by the assessee for ₹ 6 lakhs from his HUF. We find that this issue was not subject matter of reassessment. The assessment was not reopened for conducting an inquiry on this issue, and therefore the ld.Commissioner cannot take cognizance of an issue which has already attained finality in the regular assessment order passed under section 143(3) on 13.3.2014. The Assessing Officer has nowhere inquired this issue in the assessment order; nor it was subject matter of re-assessment. Therefore, it could not be taken up by the ld.Commissioner for taking up this issue. He should have questioned the original assessment order passed under section 143(3) on 13.3.2014, which has not been done by him. Therefore, the finding of the Commissioner recorded qua additional show cause notice is concerned, is not sustainable. We quash this finding and part of that order is vacated.

  ---

• 2019 (11) TMI 516
  Addition being income from investment not included - diversion of income by overriding titles - HELD THAT:- As given thoughtful consideration to the orders of the authorities below and have carefully considered the letter of the Government of India referred to hereinabove. The facts of the case, read with the aforesaid letter of the Government, clearly demonstrates that this is a case of diversion of income by overriding titles. Considering the fats of the case in the light of the letter of Government of India, we find that the reliance by the ld. CIT(A) on the ratio laid down by the Hon'ble Supreme Court in the case of Associated Power [ 1995 (11) TMI 5 - SUPREME COURT] is well taken. The ratio laid down by the Hon'ble Supreme Court has been followed in various judgments, to name a few, CIT Vs. New Horizon Sugar Mill Pvt Ltd [ 1998 (4) TMI 41 - MADRAS HIGH COURT] , Bijli Cotton Mills [P] Ltd [ 1978 (11) TMI 1 - SUPREME COURT] , Dalmia Cement Ltd [ 1999 (4) TMI 4 - SUPREME COURT] , etc. All these judicial decisions have been discussed elaborately by the ld. CIT(A) in his order. We, therefore, do not find any error or infirmity in the order of the ld. CIT(A). Accordingly, Ground No. 1 of the Revenue is dismissed. Disallowance made u/s 14A - HELD THAT:- Section 14A contemplates an exception for deductions as allowable under the Act are those contained u/s 28 to 43B of the Act. Section 44 creates Special application of these provisions in the cases of insurance companies. We, therefore, agree with the assessee and delete the disallowance made by the AO which is based on the application of sec. 14A of the act as according to us, it is not permissible to the AO to travel beyond section 44 and First Schedule of the Income-tax Act. Respectfully following the decision of the ITAT in the case of Oriental Insurance Co. Ltd. [ 2009 (2) TMI 240 - ITAT DELHI-B] , the additional ground raised by assessee is allowed.

  ---

• 2019 (11) TMI 515
  Rejection of books of accounts u/s 145(3) - purchase not genuine and not verifiable - Addition being 15% of alleged unverifiable purchases - HELD THAT:- In any case of best judgment, though the element of guess work is involved, however the guess work should have nexus with the material on record and discretion must not be exercised arbitrarily or capriciously. For the purposes of making the best judgment assessment, past history of the assessee has been held as reliable and reasonable basis for estimation of profits. Alternatively, comparable cases in the similar line of business should be considered. In the instant case, being the first year of operations, past history is not relevant and hence, considering the comparable case of M/s Kedia Exports Pvt. Ltd., which has declared the GP rate of 10.04% as against 11.41% declared by the assessee, we are of the considered view that no addition should be made in the hands of the assessee company. As relying on M/S ALLIED GEMS CORPORATION AND VICE-VERSA [ 2017 (12) TMI 1252 - ITAT JAIPUR] additions so made and sustained by the ld. CIT(A) is hereby directed to be deleted and the appeal of the assessee is allowed.

  ---

• 2019 (11) TMI 514
  Addition on account of suppression of production - high consumption of electricity - HELD THAT:- AO has proceeded to make addition on the basis of suspicion and noticing the factum of higher consumption of electricity and lower production which could be a case of strong suspicion but it is also settled law that suspicion, however strong, cannot take the place of evidence against the assessee for making a sustainable addition. CIT(A) was right in deleting the addition by following his own order for the preceding assessment year 2011-12, which was self-explanatory and justified and reasonable. We also find that there is allegation of the Assessing Officer regarding suppressed production, which were sold in the market. CIT(A) was also quite correct in taking the cognizance of proposition rendered by ITAT Hyderabad Bench in the case of Balaji Steel Rolling Mills (P) ltd [ 2016 (2) TMI 1262 - ITAT HYDERABAD] wherein, held that the electricity consumption depends upon various factors like type of quality of scrap used, number of break downs, quality of labour/supervisory staff, diligence of management etc and thus, it was held that the action of the AO estimating the production of assessee on the basis of alleged excessive consumption of electricity is erroneous and fallacious. - Decided against revenue

  ---

• 2019 (11) TMI 513
  Disallowance of deduction claimed u/s 10AA - importing diamonds for re-export - whether activity of the assessee comes within the expression services ? - HELD THAT:- In the absence of definition of services under Section 10AA of the Act, services as defined under the SEZ Act and rules framed thereunder would be relevant. As discussed earlier, the definition of services under the SEZ Act and rules framed thereunder encompasses trading activity also. Therefore, import of diamonds for re-export though, may be in the nature of a trading activity, but is certainly in the nature of services , hence would qualify for deduction under Section 10AA of the Act. In the case of Goenka Diamonds Jewellers Ltd. [ 2017 (8) TMI 1405 - RAJASTHAN HIGH COURT] the Tribunal, after examining the provisions of Section 10AA of the Act vis- -vis the SEZ Act and rules framed thereunder, had concluded that since the definition of services under the SEZ Act also includes trading activity, the activity relating to import of diamonds for re-export would qualify for deduction under Section 10AA of the Act. The aforesaid decision of the Tribunal was upheld by the Hon ble Rajasthan High Court while discussing a batch of appeals filed by the Revenue against the decision of the Tribunal. It is relevant to observe, in the aforesaid case also, the assessee had its unit in Surat SEZ. The other decisions cited by the learned AR also express similar view. Therefore, consistent with the view taken by the different Benches of the Tribunal, we are of the view that assessee is eligible to claim deduction under Section 10AA of the Act, since, the activity of import of diamonds for re-exporting comes within the nature of services as provided under Section Section 10AA of the Act. We must observe that learned Commissioner (Appeals), while sustaining the disallowance of deduction claimed by the assessee under Section 10AA of the Act, has referred to the decision of the Hon ble Supreme Court in the case of M/s. Dilip Kumar and Company Ors. [ 2018 (7) TMI 1826 - SUPREME COURT] . However, the ratio laid down in the said decision rather supports the claim of the assessee, since, the assessee has fulfilled the basic conditions of Section 10AA of the Act and comes within the framework of the provision. As discussed earlier, the activity of the assessee comes within the expression services as per Section 10AA of the Act, as per the definition of services under the SEZ Act and rules framed thereunder. Therefore, in our considered opinion, reference to the decision in the case of M/s. Dilip Kumar and Company Ors. (supra) would be of no help to the Revenue. In view of the aforesaid, we direct the Assessing Officer to allow assessee s claim of deduction under Section 10AA - Decided in favour of assessee.

  ---

• 2019 (11) TMI 512
  Disallowance of expenses - no business activity was conducted during the year under consideration and the assessee company has not furnished any substantial evidence to show that the travel expenses were actually incurred for travelling made for business purposes - HELD THAT:- Since the assessee in the instant case has started deploying the skillful personnel and has covered the last mile of its preparedness on 07.07.2008 when the sales head Shri Sanjay Sharma was appointed, therefore, we do not find any infirmity in the order of the CIT(A) in holding that the assessee has set up its business on 07.07.2008 and, therefore, is entitled to claim the expenses as a revenue expenditure for the period from 07.07.2008 till 31.03.2009 subject to verification of the details by the AO. The submission the assessee has earned income of ₹ 17.14 million in the subsequent F.Y. 2009-10 could not be controverted by the ld. DR. No infirmity in the order of the CIT(A) in holding that the assessee has started its business operation on the date of recruitment of sales head on 07.07.2008 and directing the AO to obtain the details of expenses of ₹ 8,66,73,393/- out of the expenses disallowed of ₹ 10,28,95,398/- pertaining to the period from 07.07.2008 till 31.03.2009 and allow the same as deduction in the year under consideration. The grounds raised by the Revenue are accordingly dismissed.

  ---

• 2019 (11) TMI 511
  Disallowance of the growing charges and transportation charges - HELD THAT:- As rightly pointed out by the ld. D.R., both the issues relating to disallowance out of growing charges and transportation charges have already been decided by the Tribunal [ 2018 (6) TMI 1671 - ITAT KOLKATA] passed while disposing of the appeal of the Revenue holding that the disallowance sustained by the CIT(Appeals) out of growing charges and transportation charges was fair and reasonable and there was no justifiable reason to interfere with the same. The said conclusion drawn by the Tribunal squarely covers the issues raised by the assessee in this Cross Objection and accordingly following the same, dismiss this Cross Objection filed by the assessee.

  ---

• 2019 (11) TMI 510
  Income from other sources - Addition u/s 40A(3) - cash payment exceeding prescribed threshold - income of the assessee has been assessed under the head income from other sources - HELD THAT:- Assessing Officer has himself stated that the assessee has claimed deduction u/s 57 and out of total expenses, ₹ 3,48,150/- has been disallowed by invoking the provisions of section 40A(3) of the Act. It is no doubt true that section 40A(3) of the Act relates to expenditure under the head Income from business/profession . However, by virtue of section 58 provisions of section 40A(3) are equally applicable where the income of the assessee is assessed under the head income from other sources . Even though the Assessing Officer has not specifically stated so while invoking section 40A(3) of the Act, however, mere omission of reference to section 58 by the Assessing Officer would not render the addition so made by the Assessing Officer untenable in law given that the substance of the transactions relates to cash payment exceeding ₹ 20,000/- which is not disputed by the assessee. There is no infirmity in the order of the AO as far as the invoking of section 40A(3) where the same is read along with section 58 of the Act. Further, the assessee has contended that it has made cash payment under exceptional and unavoidable circumstances as the payment has been made on account of expenses for breakfast, lunch dinner paid to the various restaurant, halwai etc. at places outside the regular place of operations of the assessee and at these places, they do not accept the cheque payment being unknown to the assessee. Assessee has relied on the Coordinate Bench decision in case of M/s A Daga Royal Arts, Jaipur [ 2018 (6) TMI 1240 - ITAT JAIPUR] We find that the said contention of the assessee regarding exceptional and unavoidable circumstances under which it has made the payments in cash though raised before the lower authorities have not been examined. Therefore, it would be appropriate if the matter is set aside to the file of the ld. CIT(A) who shall consider the aforesaid contention - Decided in favour of assessee for statistical purposes.

  ---

• 2019 (11) TMI 509
  Disallowance of interest u/s 24(b) - A.O. has denied the claim on the ground that the assessee has not utilized the borrowed fund in respect of which the interest was paid for the purpose of acquiring or constructing of the property in question - HELD THAT:- A.O. has noted the fact that the borrowed fund was utilized for repayment of the earlier loan. However, there is no finding on the part of the A.O. that whether the earlier loan was taken for the purpose of acquisition/construction of the property in question, therefore, until and unless, this fact is verified that the earlier loan was taken and utilized by the assessee for acquisition/construction of property in question, the claim of the assessee that the borrowed fund was utilized for repayment of the earlier loan taken for the purpose of construction of the property cannot be accepted. Therefore, this issue requires a proper verification of facts regarding the funds utilized by the assessee for the purpose of acquisition/construction of the property in question and in case, the earlier loan was utilized by the assessee for the construction/acquisition of the property then to the extent of such loan utilized for the purpose of construction of the property and repayment of the same by the subsequent loan would be eligible for claim u/s 24(b) of the Act. In absence of the verification of the relevant facts by the authorities below, this issue is set aside to the record of the A.O. for proper verification and readjudication. Alternative plea of deduction u/s 36(1)(iii) - A.O. has denied the claim of the assessee on the ground that this claim was not made in the return of income or in the revised return of income, therefore, the same cannot be entertained - HELD THAT:-There is no embargo for considering the said claim by the appellate authority if all the relevant facts for adjudication of such issue are available on record. CIT(A) ought to have considered and adjudicated this claim. Since, this issue has not been decided by the ld. CIT(A) and the A.O. refused to entertain the same, therefore, the same is set aside to the record of the A.O. for consideration and adjudication. Needless to say, the assessee be given proper and reasonable opportunity of hearing.

  ---

• 2019 (11) TMI 508
  Condonation of delay in filing an appeal - mistake on the part of the counsel - HELD THAT:- When an assessee authorizes a counsel to appear on his behalf, such authorization is given by placing faith on the legal expertise of the Counsel and also with the hope that the counsel shall take care of the interest of the assessee. Hence, when there is a lapse on the part of the legal counsel, in my view, the assessee should not be found fault with, unless it is shown that the blame put on the counsel with malafide intentions in order to cover up the mistake/lapse on the part of the assessee. In the instant case, it is the contention of the Ld D.R that the explanation of the assessee is not supported by any evidence. Submission of the Ld A.R that the assessee could not collect a letter from the Counsel in view of the strained relationship, is a reasonable explanation when we take into account human conduct and probabilities, since a professional counsel cannot be expected to admit his lapses, lest it should affect his reputation. In any case, no material was brought on record by the revenue to show that the assessee was continuing to avail the services of very same counsel even after noticing his lapse. Hence, reason given by the affidavit cannot be considered to be a malafide one. It is well settled proposition that the mistake on the part of the counsel constitutes sufficient cause in the matter relating to condonation of delay.

  ---

• 2019 (11) TMI 507
  Exemption u/s 11 - discrepancy in respect of unexplained loan - assessee society is registered under section 12AA - HELD THAT:- The Ld. CIT(A) held that it is not the case of the AO that certain unsecured loans were bogus or unproved as seen from the explanation given by the appellant in assessment proceedings and also no separate addition has been made u/s 68 in respect of these loans. The exemption u/s 11 can be denied only when the assessee s case falls in any of the limb of section 13. In the present case, assessee has not defaulted any of the limb of section 13 - denial of exemption by the AO is not justified. - Order of CIT(A) sustained. Addition on account of non deduction of TDS by holding that assessee trust was allowed the benefit of section 11 12 - HELD THAT:- provisions of section 40(a)(ia) are not applicable on trust. Explanation 3 to section 11 inserted by FA, 2018 which provides that provisions of section 40(a)(ia) is applicable in case of charitable or religious trust or institution is applicable from 01.04.2019. - Since assessee is eligible for exemption u/s 11, no addition can be made u/s 40(a)(ia) Addition u/s 68 - HELD THAT:- We find that the assessee has duly explained the transaction with Anil Nuhal and Krishna Developers which has been rightly appreciated by the ld CIT(A) and no infirmity therein has been observed by the ld CIT(A). We accordingly confirm the findings of the ld CIT(A) and the ground of the Revenue is dismissed. Addition on account of expenses claimed for investment in acquisition of fixed assets by holding that assessee trust was allowed benefit of section 11 12 - AO has denied the claim of application of income by way of capital expenditure towards acquisition of fixed assets for the reason that the assessee society was held not eligible for exemption under section 11 and 12 of the Act. However, while disposing off the aforesaid grounds of appeal, we have already held that the assessee society is eligible for exemption under section 11 and 12. Hence, the said ground of appeal becomes academic and is hereby dismissed as infructous. Accumulation or set apart to the extent of 15% by holding that assessee trust was allowed the benefit of section 11 12 - AO did not allow the accumulation or set apart to the extent of 15% of total receipts to the assessee as the assessee s claim of exemption u/s 11 is rejected - HELD THAT:- . Given that besides the fees receipts and other income, the assessee has shown unsecured loans of ₹ 8,85,32,180, prima facie the excess of expenditure has been met out of unsecured loans and not out of total fee and other income receipts during the year. Therefore, it needs to be examined in detail to what extent the unsecured loans have been utilised for meeting the expenditure and to what extent, fee receipts and other income have been utilised for meeting the expenditure and then determine the amount of accumulation out of total fee and other income receipts accordingly. In the result, the matter is set-aside to the file of the Assessing officer for the limited purposes of determination the accumulation of receipts, if any and take action as per law. Appeal of the Revenue is partly allowed for statistical purposes.

  ---

• 2019 (11) TMI 506
  Addition on account of delayed payment of Employees Contribution to Provident Fund and ESIC - HELD THAT:- As decided in GUJARAT STATE ROAD TRANSPORT CORPORATION [ 2014 (1) TMI 502 - GUJARAT HIGH COURT] since assessee had not deposited said contribution in respective fund account on date as prescribed in Explanation to section 36(1 )(va), disallowance made by Assessing Officer was just and proper - Appeal of the Assessee is dismissed.

  ---

• 2019 (11) TMI 505
  TP Adjustment - Comparable selection - HELD THAT:- Assessee-company was incorporated as 100% export oriented unit under STPI of India Scheme at Bangalore, engaged in the products and works essentially in the nature of application acceleration solutions, management of congested Networks links and provides IT enabled services in the nature of order processing services technical support services to its Associated Enterprises thus companies functionally dissimilar with that of assessee need to be deselected. We restore the disputed issue to the file of the TPO for fresh examination and direct the TPO to include M/s.Akshay Software Technologies Ltd. and M/s.Spry Resources India Pvt. Ltd. as comparable in the final list of comparables for determination of ALP. The ld. AR restricted his arguments to exclusion and inclusion of comparable only. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes.

  ---

• 2019 (11) TMI 504
  Reopening of assessment u/s 147 - addition on account of share capital u/s 68 - HELD THAT:- From the reading of the reasons, we find that the value of the entry taken has been mentioned as ₹ 5,00,000/- twice along with the similar instrument number being 151129. The name of the account holder for each entry namely Keshav Sehkari and Umesneh Securities Pvt. Ltd. have been mentioned. Regarding the branch of entry giving bank, the reason mentioned Umesneh Securities Pvt. Ltd. and Keshav Sehkari. Not only this, the Assessing Officer has also mentioned same account number 625 for both the entries under the column account number entry giving account. Thus, AO has committed a number of mistake in the reasons recorded for issue of notice u/s 148. He also mentioned that he has reasons to believe that an income of ₹ 10,00,000/- represents the assessee s own unaccounted income which has escaped assessment whereas the amounts received as per the bank statements is only of ₹ 5,00,000/-. This shows as absolute lack of application of mind on the part of the AO which makes the assessment null and void ab initio . The amount of ₹ 10,00,000/- is not supported by any correct cheque number whereas the allegation is that the assessee has received accommodation entry to the tune of ₹ 10,00,000/-. In our considered opinion, the basis of reopening itself is based on wrong facts therefore, the same cannot be upheld. Since, the reasons recorded by the Assessing Officer suffered from infirmity, therefore, we quash the reassessment made by the Assessing Officer without jurisdiction. - Decided in favour of assessee.

  ---

• 2019 (11) TMI 503
  Unexplained cash from during the course of search - HELD THAT:- As decided in the case of Smt. Sarita Gupta Group [ 2019 (8) TMI 1426 - ITAT AHMEDABAD] , there is no dispute with regard to the fact that assessee was found possessing unaccounted cash in physical form as well as deposited in the books and bank accounts. It was for the assessee to explain source of the cash as well as genuineness of the transaction. It was also for the assessee to prove creditworthiness of the persons who have given her the cash. - The first onus is upon the assessee to fulfil the conditions provided u/s 68 of the Income Tax Act up to a reliable degree, only thereafter, the AO would rebut but here the assessee herself has failed to demonstrate the genuineness of the transaction as well as creditworthiness of alleged creditors. - Therefore, the same stand dismissed.

  ---

• 2019 (11) TMI 502
  Addition u/s 40A(2)(b) - disallowance of milk transportation charges paid to specified persons - HELD THAT:- The provisions of section 40A(2)(a) of the Act are attracted where a person makes payment to the related parties as defined in section 40A(2)(b) at a price which is higher than the market price. In this regard, the Revenue authorities have to come to a finding after the onus is discharged by the assessee to establish that it has not paid any price higher than the market price to the related parties. AO in the present case while working the disallowance had considered total transactions of assessee company for transportation of milk, whereas the same should be restricted only to the transaction of milk through the directors. In this regard, the CIT(A) has re-worked the disallowance in the hands of assessee. We find merit in the working of CIT(A) to this extent. However, while working out the cost of milk transportation per litre, CIT(A) by an error has adopted the figures after taking the ratio of milk transported in litres per rupee, in fact the ratio to be applied is rupees/per litres transported. The assessee has filed the tabulation in this regard and the payment to related parties works out to 62 paise per litre as against 69 paise per litre paid to unrelated parties. In such circumstances, there is no merit in making any disallowance under section 40A(2)(b). For this limited purpose, the Assessing Officer is directed to verify the working of assessee and delete the addition made in the hands of assessee. Appeal of assessee is allowed.

  ---

• Customs

• 2019 (11) TMI 501
  Refund of excess Customs duty paid - finalization of provisional assessment - Section 18(2) of the Customs Act, 1962 - unjust enrichment - HELD THAT:- The doctrine of unjust enrichment is not applicable in the present case because the Shipping Corporation of India is a Public Sector Undertaking and in view of the Supreme Court decision in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] where it was held that in the case of Public Sector Undertaking, doctrine of unjust enrichment is not applicable. Further, the doctrine of unjust enrichment will not be applicable because the appellant is seeking only the refund of excess duty paid inter alia at the time of provisional assessment and when the assessment was finalized it was found that he has paid excess amount of ₹ 38,85,649/- which should have been refunded to him without issue of show-cause notice - Further both the authorities have examined in detail the application of the doctrine of unjust enrichment and has returned the categorical findings that doctrine of unjust enrichment is not applicable in the present case and the Shipping Corporation of India has not passed on the Customs duty to any other persons and has itself suffered duty. Also, the authorities have examined in detail the application of the doctrine of unjust enrichment and has returned the categorical findings that doctrine of unjust enrichment is not applicable in the present case and the Shipping Corporation of India has not passed on the Customs duty to any other persons and has itself suffered duty. There is nothing wrong in the impugned order which is upheld by dismissing the appeal of the Revenue - appeal dismissed - decided against Revenue.

  ---

• 2019 (11) TMI 500
  Valuation of imported goods - hot rolled steel plates (non-alloy) - enhancement of value - similar goods or not - HELD THAT:- Though there is no provision under section 128 of Customs Act, 1962 for hearing both sides before passing of an order by the Commissioner of Customs (Appeals) and it was necessary to issue a show cause notice proposing the grounds of enhancement, unless waived by the importer, the Tribunal was magnanimous enough to allow the pleas of Revenue to be argued before the first appellate authority on their appeal. It was expected that the first appellate authority would render its decision after hearing, and considering, the submissions of both sides. We are unable to satisfy ourselves that the imports by M/s Mazgaon Dock Ltd could be designated as similar merely because of being contemporaneous. From the records of the original authority, we perceive a trend of fall in price during the said period. It would also appear that no efforts have been made by the assessing officer to ascertain the manner in which the alleged undervaluation would have been compensated to such extent as to warrant adoption of a value that was almost double that of the declared value - Such excess undervaluation, as alleged, should have been subject to serious investigation and appropriate penalties imposed if found to be so. In the absence of such, it can only be deduced that the exercise of enhancement of value so undertaken was without sufficient evidence on hand. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 499
  Classification of imported goods - Benefit of exemption - import of aluminous cement - only point of allegation that can sustain in the present case is that the assessee has wrongly classified the imported goods in their bills of entry - HELD THAT:- The importer assessee is not an expert in classification of products and it is always possible that they claimed wrong classification. It is open for the department to direct the importer to correct classification or issue a show-cause notice proposing revision of classification. Merely claiming the wrong classification by itself does not amount to mis-declaration of the goods and there is nothing on record to show that the description of the goods in the Bill of entry and other documents as well as in the test report do not match - The department s case has to fail on this ground alone for the extended period of limitation and correspondingly the penalties also need to be set aside. Benefit of N/N. 21/02 - high alumina refractory cement classifiable under 2523 90 20 - HELD THAT:- A plain reading of the notifications shows that the exemption is available for any high alumina cement falling under chapter 25. It does not distinguish between high alumina cement and low alumina cement. If the intention of the notification was to confine it to aluminous cement falling under a specific heading of the Customs Tariff, it would have said so - From the documents produced before us, there is no doubt that what is imported was aluminous cement (with high alumina content). Therefore, there is no doubt in our mind that what was imported was aluminous cement for the purpose of manufacture of refractory bricks. Therefore, the exemption Notification No. 21/2002 is fully available to the appellant - the demand on this count even within the normal period of limitation does not sustain. Confiscation of goods - penalties - HELD THAT:- There was no mis-declaration at all and the appellant is entitled for the exemption notification in any case and there is nothing to be gained by the appellant by classifying their product under one heading or the other, the confiscation of the goods and imposition of penalties are also not sustainable. Consequently the personal penalties imposed on Shri Arun Kumar Giri and Shri Thumma Antony also need to be set aside. Appeal allowed - decided in favor of appellant.

  ---

• Service Tax

• 2019 (11) TMI 498
  Condonation of delay in filing appeal - an appeal was filed by the Managing Director of the petitioner-firm with a delay of 272 days, due to reasons, beyond his control, like death of his mother, hospitalization and recovery of his illness - power of Commissioner (Appeals) to condone delay - HELD THAT:- This Court is not inclined to interfere with the order of the Tribunal, on the ground that in a similar case in M/S. FALCON TYPES LTD. VERSUS THE CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CUSTOMS (SEAPORT-IMPORT) [ 2016 (7) TMI 40 - MADRAS HIGH COURT] , we have considered the power of the appellate authority to condone the delay beyond the extendable period and it was held that It is well settled law that When the appeal itself is time barred and when the appellate authority or the CESTAT, Chennai, cannot condone the delay, in terms of the statutory provisions, prescribing a specific period of limitation. Petition dismissed - decided against petitioner.

  ---

• 2019 (11) TMI 497
  Rectification of mistake - error apparent on the face of record or not - reopening of the case - HELD THAT:- Para-13 of the impugned final order which, in fact, has been quoted in the impugned application is itself sufficient to reflect that all the contentions as were raised by the appellant have duly been dealt with in the said final order. As far as the arbitrary/vagueness of a show-cause notice is concerned, the same is held to be correct in principle. The decision cannot be re-opened under the guise of rectification of mistake. Reliance placed in the case of M/S. SRF LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE-CHENNAI-I [ 2019 (4) TMI 750 - CESTAT NEW DELHI] which clarifies that a decision on debatable point of law or fact cannot be corrected by way of rectification. Otherwise also the impugned final order has remanded the matter to the adjudicating authority below for quantification of the demand. There seems no error which is apparent of its record in the impugned final order - Application dismissed.

  ---

• 2019 (11) TMI 496
  Condonation of delay in filing appeal - service of order - change in email address - address changed to new one - HELD THAT:- A perusal of the application does not indicate that any letter in writing was submitted by the Appellant to the Department regarding change of address. Only the change in the e-mail address had been intimated to the Department and this change of e-mail address would not necessarily lead to a conclusion that the postal address had also changed in the meantime. Mere submission of the certificate of registration cannot also be made a ground that the Department should have changed the address of the Appellant. In the absence of any specific communication from the Appellant regarding change of address, the Department was justified in sending the order at the recorded address - This apart, it is also not the case of the Appellant that when the order was sent to the earlier Vasant Vihar address, it was not received by the Appellant. The averments made in the application are not satisfying that the appellant was prevented by sufficient cause from preferring the appeal within the stipulated time - delay Application is, accordingly, rejected. Appeal dismissed - decided against appellant.

  ---

• 2019 (11) TMI 495
  Maintainability of appeal - non-payment of pre-deposit - section 35F (1) of the Central Excise Act 1944 - Imposition of penalty - renting of immovable property - duty demand against renting of immovable property with retrospectively effect from 1-6-2007 for the period between 2008-09 and 2011-12 - extended period of limitation - HELD THAT:- It is observed that Learned Commissioner (Appeals) had dismissed the appeal before him under section 35F (1) of the Central Excise Act 1944 for non-payment of pre-deposit at the required rate and simultaneously also discussed on the merit of the appeal. Going by the statutory provision contained in section 35F (1), he should not have entertained the appeal for hearing without payment of pre-deposit and in such a case merit of the appeal should not have been discussed since the same amount to admission of appeal and its disposal on merit. Further, section 80 (2), as was existing during the relevant period permits non imposition of penalty if service tax payable as on 6-3-2012 was paid along with interest in full within six months of Finance Act 2012 coming into force. However, going by the provision containing in section 80(1), which is applicable to the present case of the appellant since there is reasonable cause for the failure on the part of the appellant in non-payment of service tax during the period of hegemony of taxability on renting of immovable property, no penalty is leviable on the appellant. The order passed by Commissioner (Appeals) Central Excise GST, Nagpur to the extent of imposition of penalty of ₹ 28,61,269/- u/s 78 of the Finance Act is here by set aside - Appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 494
  Levy of penalty - service tax paid before issuance of SCN - Classification of services - Commercial Training and Coaching Service or Information Technology Service? - HELD THAT:- During the relevant period, there were conflicting decisions regarding the classification of the impugned service. The Department has also not brought any evidence on record to show that there was suppression of material fact with intent to evade payment of tax. Penalties u/s 76, 77 and 78 of the Finance Act, 1994 dropped - appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 493
  GTA Service - services of tempo for transporting their outward material from the factory - sub-clause 21(b) of notification no. 25/2012 - extended period of limitation - HELD THAT:- There is no finding of the lower authorities that consignment note were being issued by the said individual tempo driver in which case the services cannot be held to be GTA service so as to make the appellant liable to service tax. Further, in terms of the notification, if the charges are not more than ₹ 1500/- per trip the same are exempted in terms of notification. The statement attached indicate that the said charges were less than ₹ 1500 per trip. There is also favour with the appellant s contention that the demand, which stands raised by invoking extended period is to be set aside. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 492
  Levy of service tax - pre-closure charges of loan account - locker rent charges - appellant is a banking institution - period 2005-06 to 2009-10 - HELD THAT:- On pre closure charges of loan account, it is found that the Ld. Counsel made a concession that he is not contesting on merit. Therefore, demand for the normal period stands upheld. Time limitation - penalty - HELD THAT:- There is a force in the argument of the Ld. Counsel that the issue is not free from doubt as regard the pre closure charges will attract service tax or otherwise. Since there are conflicting judgments of this Tribunal in the case of Small Industries Development Bank of India (SIDCO) and Housing and Urban Development Corporation Ltd. (HUDCO), [ 2011 (11) TMI 95 - CESTAT, AHMEDABAD ] the matter was referred to larger bench. In this position, we observe that there is no malafide intention on the part of the appellant. Therefore, the demand for the extended period is not sustainable and the same is set aside. For the same reason, the penalty imposed under section 76 78 is also set aside by invoking section 80 of the Finance Act, 1994. Locker rent charges - HELD THAT:- Though the locker rent charges was included in the service of Banking and Financial service and other services with effect from 10/09/2004, however, by virtue of notification 25/2004-ST, the value of locker rent charges received prior to 10/09/2204 is exempted - There is no dispute that the entire amount on which the Service Tax demand was raised was received prior to 10/09/2004 as can be seen in OIO. In this position, there is no doubt that amount being received prior to 10/09/2004 towards locker rent charges is covered by the exemption notification 25/2004-ST - the demand on locker rent charges is set aside. Appeal allowed in part.

  ---

• 2019 (11) TMI 491
  Waiver of penalty - Non-payment of service tax - Sale of Space or Time for Advertisement - it is alleged that appellant neither registered nor paying due service tax on the services rendered by them during the period 01.05.2006 to 31.10.2009 - malafide intent present or not - HELD THAT:- The Ld. Commissioner has categorically recorded the defense taken by the respondent wherein the respondent has intimated to the appellant through their letters dated 20.01.2010 and 28.01.2010 by enclosing a copy of letter dated 12.11.2009 issued by Railway Board wherein it was informed that the Ministry of Railway had written to Ministry of Finance, seeking exemption for railways from levy of service tax, enveloping both their core and auxiliary services - It was also informed that a Cabinet Note is also being moved seeking specific exemption for several auxiliary activities of Railways from the purview of service tax including the present service in question. There are no malafide intentions of the railways found, not to pay service tax on the activity undertaken by them for providing the services of Sale of Space or Time for Advertisement - penalty rightly waived. Appeal dismissed - decided against Revenue.

  ---

• 2019 (11) TMI 483
  CENVAT Credit - capital goods - credit denied on motor vehicles used by them for providing these services on the ground that motor vehicles are not entitled for capital goods CENVAT Credit except in respect of some services - It is a case of the Revenue that the motor vehicles of which the appellant has availed CENVAT Credit were not used for any of these services but were used for Port services which is their main service. HELD THAT:- When a SCN was issued, the burden of proving facts and allegations in the show cause notice rests on the department and not on the noticee. Apart from this, it would stand to reason that the motor vehicles would be used for cargo handling as well as for other services within port. Having bought motor vehicles it is unlikely that the appellant would use exclusively them for one service and not for the other - As long as the appellant has used motor vehicles for rendering Cargo Handling Services on which they have paid service tax, they are entitled to CENVAT Credit on capital goods. The motor vehicles need not be used exclusively for providing cargo handling or other listed services. The mere fact that they have also used motor vehicles for some other purposes does not deprive them of their CENVAT Credit on motor vehicles. Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2019 (11) TMI 490
  CENVAT Credit - duty paying documents - Registration of units - whether the appellant is entitled to the Cenvat credit in the Visakhapatnam unit in respect of the services rendered in their Visakhapatnam unit on which the service tax was paid by their Hyderabad unit and the challan mentioned the name and details of Hyderabad unit only? - Goods Transport Agency (GTA) services - reverse charge mechanism. HELD THAT:- During the relevant period, although the service recipient was their Visakhapatnam unit, the service tax was paid by their unit in Hyderabad and therefore, the challan also indicates the details of registration of Hyderabad unit. In this factual matrix, despite Hyderabad unit of appellant, instead of Visakhapatnam unit, paying service tax on the GTA services and the challan also giving details of Hyderabad unit, there is no dispute that both form part of the same corporate entity and the services were used in the Visakhapatnam unit and that Cenvat credit against the same challans was not availed by their Hyderabad unit. There is substantial compliance and agreement with Rule 9(1)(e) of CCR 2004 in the present case - the appellant is entitled to Cenvat credit - appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 489
  CENVAT credit - electricity generated and sold by the appellant sugar manufacturing company from its waste product called bagasse - addition of Explanation 1 to Rule 6(1) of CENVAT Credit Rules, 2004 w.e.f. 01.03.2015 - HELD THAT:- Admittedly electricity, though not found in tangible form, is classifiable under Tariff item no. 27160000 of Central Excise Tariff Act, 1985. But it is a non-excisable goods and the process of generation of electricity though a manufacturing process is dutiable if it is generated from mineral oils, bitumen substance, mineral waxes etc. and electricity generated from bagasse is not covered under Chapter 27 like electricity generated through solar power, hydro power, wind power etc. As has been held by Hon'ble Allahabad High Court in GULARIA CHINI MILLS AND OTHERS VERSUS UNION OF INDIA AND OTHERS [ 2013 (7) TMI 159 - ALLAHABAD HIGH COURT] electricity energy is not an excisable goods nor it is exempted goods as defined in Rule 2(d) of the CENVAT Credit Rules, 2004. Thus, the duty demand made against such sale of surplus electricity manufactured through waste product is not sustainable in law - appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 488
  Refund of excess duty paid - rejection of refund on the ground of time limitation - original refund application was filed within time but it was returned for deficiencies and is resubmitted by the assessee after rectifying the defects - whether the original date should be considered or the date of the final submission for purpose of reckoning limitation under Section 11B? - HELD THAT:- This issue is no longer res integra and it has been decided by the Hon ble High Court of Delhi in the case of COMMISSIONER OF C. EX., DELHI-I VERSUS ARYA EXPORTS AND INDUSTRIES [ 2005 (4) TMI 90 - HIGH COURT OF DELHI] as well as by the Hon ble High Court of Gujarat in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS AIA ENGINEERING LTD. [ 2010 (9) TMI 555 - GUJARAT HIGH COURT] that the date of the original application should be considered. Thus, the date of original application for refund before LTU should be considered for the purpose of limitation under Section 11B. In this particular case, there is another twist inasmuch as the applicant has filed a consolidated refund application before the LTU covering all their units while the final refund application was confined to their Kadapa unit only and hence the amount of refund claimed was different. Thus, the date of their original refund application filed before the LTU New Delhi should be reckoned as the date of filing the refund application - As far the question of computation and verification of documents is concerned, the original authority should be given an opportunity to verify all the documents and examine and settle the claim as per the provisions of the law. Appeal allowed by way of remand.

  ---

• 2019 (11) TMI 487
  Refund of excess duty paid - Unjust enrichment - finalization of provisional assessment - instead of paying the refund amount to the appellant, the same was credited to the Consumer Welfare Fund, in terms of Section 11B(2) of the Central Excise Act, 1944 - HELD THAT:- The incidence of excess paid duty, in this case, had not been passed on by the appellant to any other person and same has been borne by it all along, till the date of filing of the refund application. Further, the learned Commissioner (Appeals) by placing reliance on the profit and loss account has held that excess duty has been shown as an element of expenditure and thus, the doctrine of unjust enrichment is attracted for crediting the refund amount to the Consumer Welfare Fund. However, on perusal of the profit and loss account for the relevant period, I find that the excess duty reflected therein was deducted from the gross sales value of the goods. The excess duty amount indicated in the profit and loss account was towards normal sales transaction value, at which the goods were sold by the appellant. Since, the refund in question was not a part of excess duty indicated in the profit and loss account and separate accounting treatment was provided in the Balance Sheet, the interpretation placed by the learned Commissioner (Appeals) regarding transfer of refund amount to the Consumer Welfare Fund cannot be sustained. There are no merits in the impugned order passed by the learned commissioner (Appeals) - appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 485
  CENVAT Credit - credit of capital goods on TG-2 denied - Rule 6(4) of CCR 2004 - HELD THAT:- Rule 6(4) of CCR 2004 prohibits availment of Cenvat credit on capital goods used exclusively for manufacture of exempted goods. In other words, if they are used for both manufacture of dutiable products and exempted products, the Cenvat credit on capital goods can be availed - In the present case, TG-2 has been installed in an island mode exclusively for supply of power to the grid as per the PPA. In fact, the clauses in the PPA indicate that there will be two TG sets and TG-2 has to run in an island mode and is meant only for supply of power to the grid. There is nothing on record to show that PPA entered into has been modified and the clause requiring TG-2 to be in an island (isolated) mode has been modified to enable it to be interconnected with the sugar plant for use in the manufacture of sugar. Considering the contradictory pieces of evidence both made available by the appellant, it is found that the PPA is more authentic document. Even if the appellant has connected TG-2 with their sugar plant, for a short time in violation of the agreement, that does not make it capital good used in manufacture of sugar. There is also no evidence to substantiate that during the short interval when such connection is made, whether any excisable products have been manufactured. Extended period of limitation - Penalties - HELD THAT:- In this case, when the appellant has consciously entered into an agreement with APTRANSCO indicating that TG-2 set is to be isolated from the plant and to be used exclusively for generation of electricity to be whole out to the grid, they should not have taken the Cenvat credit on capital goods under Rule 6(4). They have taken ineligible Cenvat credit with an intent to illegally avail Cenvat credit and to that extent evade payment of duty - the extended period of limitation has been correctly invoked and also the penalties have been correctly imposed upon the appellant. Appeal dismissed - decided against appellant.

  ---

• 2019 (11) TMI 484
  Cenvat CREDIT - closing stock of inputs and inputs contained in the final/finished goods as on 31.03.2005 - reversal of CENVAT Credit sought on the ground that the appellant had moved out of CENVAT scheme and opted for exemption under N/N. 08/2003-C.E. dated 01.03.2003 - HELD THAT:- The issue is no more res integra, as submitted by the Ld. Consultant for the appellant, since the very jurisdictional High Court in the case of M/s. Tansi Fabrication Works [2018 (7) TMI 1371 - MADRAS HIGH COURT] after considering the decision of the Hon ble Apex Court in M/s. COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [1999 (8) TMI 920 - SUPREME COURT] and also the decision of the Hon ble Punjab and Haryana High Court in the case of Commissioner of C.Ex., Chandigarh Vs. M/s. C.N.C. Commercial Ltd. [2007 (10) TMI 203 - HIGH COURT PUNJAB AND HARYANA] has concluded that the petitioner therein having rightly availed the CENVAT Input Credit originally, could not be called upon to reverse the same merely because it was stepping into exemption regime. There was no reversal required, as demanded by the Revenue - The impugned order therefore cannot sustain and is accordingly set aside. Extended period of limitation - HELD THAT:- The Revenue has even failed to justify invoking the extended period of limitation since, the Show Cause Notice is issued beyond the normal period; the period is 01.04.2005 whereas the Show Cause Notice came to be issued in January 2008 i.e., after nearly three years and that the appellant had at least a year before filed its reply - Moreover, the alleged suppression is based on statutory documents like P L Account and balance-sheet and no new or external materials/documents were used or even an independent report for that matter, to allege such suppression - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

  ---

• 2019 (11) TMI 482
  Maintainability of appeal - appeal dismissed for non-prosecution - HELD THAT:- Perusal of record shows that since the filing of appeal till date there is no single appearance of the appellant except the repeated written request of the adjournment. Today's absence coupled with the above observation for the conduct of the appellant is sufficient to opine that appellant is not interested in pursuing the impugned appeal - the appeal deserves dismissal for want of prosecution. Appeal dismissed for non-prosecution.

  ---

• 2019 (11) TMI 481
  CENVAT credit - Process amounting to manufacture or not - appellant had undertaken certain process of packing, repacking, labeling, relabeling etc. on this product and discharged duty on the same on clearance of the goods from the factory - whether the appellant is entitled to cenvat credit of duty paid on raw materials which were processed and resulted into finished product and cleared on payment of duty? - HELD THAT:- The issue is no more res integra being covered by the judgment of the Hon ble Bombay High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [2012 (7) TMI 141 - BOMBAY HIGH COURT] where it was held that once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity docs not amount to manufacture. Appeal allowed - decided in favor of appellant

  ---

• 2019 (11) TMI 480
  Refund of duty paid - duty paid under protest - Benefit of N/N.16/82 dated 04 February, 1982 - concessional rate of duty - Polyester Staple Fiber - denial of refund on the ground of unjust enrichment - HELD THAT:- Inasmuch as the Lower Authority have not verified and examined the said invoices, we deem it fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority - Needless to say that the appellant would produce the entire documentary evidences before him and would establish, either from the said invoice or from any other evidence that the duty element of which refund is being claimed by them does not stands collected from their customers. Appeal allowed by way of remand.

  ---

• Indian Laws

• 2019 (11) TMI 486
  Bail application - offence punishable Section 23(b) and Section 28 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Smuggling - Ganja - contraband item - section 67 of the NDPS Act - HELD THAT:- Though the allegations are extremely grave, fact remains that the quantity seized from the possession of the applicant is just above the upper limit of the smaller quantity. There is no case for the prosecution that the applicant is involved in any other crimes. Furthermore, the case records reveal that the investigation has made much headway. In the facts and circumstances, by imposing stringent conditions the applicant can now be enlarged on bail - applicant shall be released on bail on his executing a bond for ₹ 50,000/- with two solvent sureties each for the like sum to the satisfaction of the court having jurisdiction - Application allowed.

  ---